HOUSE LABOR & COMMERCE STANDING COMMITTEE
March 20, 1995
3:10 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Jerry Sanders
Representative Brian Porter
Representative Kim Elton
Representative Beverly Masek
Representative Gene Kubina
MEMBERS ABSENT
None
COMMITTEE CALENDAR
HB 236: "An Act relating to reductions in compensation for
state officers and employees; and providing for an
effective date."
HEARD AND HELD
WITNESS REGISTER
REPRESENTATIVE MARK HANLEY
Alaska State Legislature
State Capitol Building, Room 507
Juneau, AK 99811-1182
Telephone: (907) 465-4939
POSITION STATEMENT: Provided information regarding HB 236
WENDY REDMON, Vice President for University Relations
University of Alaska, Statewide
John Butrovich Building
P.O. Box 755000
Fairbanks, AK 99775
Telephone: (907) 474-7582
POSITION STATEMENT: Testified on HB 236
MIKE MCMULLEN, Acting Director
Division of Personnel
Department of Administration
P.O. Box 110201
Juneau, AK 99811-0201
Telephone: (907) 465-4430
POSITION STATEMENT: Provided information regarding HB 236
MYRTLE ELLERBEE, Manager
Title IV-E Program
Division of Public Assistance
Department of Health and Social Services
P.O. Box 110640
Juneau, AK 99811-0640
Telephone: (907) 465-3347
POSITION STATEMENT: Testified on HB 236
PREVIOUS ACTION
BILL: HB 236
SHORT TITLE: REDUCTION IN STATE EMPLOYEE COMPENSATION
SPONSOR(S): FINANCE
JRN-DATE JRN-PG ACTION
03/06/95 597 (H) READ THE FIRST TIME - REFERRAL(S)
03/06/95 597 (H) LABOR & COMMERCE, FINANCE
03/17/95 (H) L&C AT 03:00 PM CAPITOL 17
03/17/95 (H) MINUTE(L&C)
03/20/95 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 95-21, SIDE A
Number 000
The House Labor & Commerce Standing Committee was called to order
by Chairman Pete Kott at 3:10 p.m. Members present at the call to
order were Representatives Kott, Rokeberg, Porter, Elton, Masek,
and Sanders. Representative Kubina was absent at the call to
order. He stated there was a quorum.
HB 236 - REDUCTION IN STATE EMPLOYEE COMPENSATION
CHAIRMAN PETE KOTT asked the prime sponsor of HB 236,
Representative Mark Hanley, to join them at the table. Chairman
Kott asked if there was a suggested amendment to HB 236.
Number 025
REPRESENTATIVE MARK HANLEY pointed out that the amendment addresses
the oversight of the Governor and Lieutenant Governor not being
included in HB 236. He commented they have an idea of how they can
incorporate a graduated scale of state employees; however, it
creates many questions as well. People were speaking of a lower
percentage reduction within lower ranges and drawing the line
somewhere. Representative Hanley stated in doing that, they must
pick percentages which would all be fairly arbitrary. This would
probably only affect the salary schedule for those that are
noncovered in the union. He said with the covered employees, the
language would suffice; you could probably put intent language in
to encourage negotiators to do the same thing. However, it is hard
to identify the same types of ranges across the board in the
different bargaining units. Representative Hanley suggested
leaving it the same as the language of the bill so an average of 5
percent would be achieved, allowing a lower reduction of some, if
that were negotiated, and a higher reduction on others, but the
average does have to be 5 percent.
REPRESENTATIVE HANLEY stated that a question had come up concerning
Class One employees who are not allowed to strike. There is
additional language requiring the same of a binding arbitrator,
that arbitrators could not award above that for the same amount of
time. He said the Governor is required to negotiate a 5 percent
reduction in the salaries and benefits to be maintained for three
years. He supposed if a bargaining unit chose not to accept, at
that point it could be imposed on them and certain bargaining units
could go on strike. However, the public safety employees would not
be able to go on strike. At that time, the legislature would have
to change it and the Governor's hands would be tied.
Representative Hanley went on to say the law would require the
Governor to implement the 5 percent reduction.
REPRESENTATIVE HANLEY suggested the committee, at minimum, address
the amendment, including the Governor and Lieutenant Governor being
reduced by 5 percent. He also suggested addressing the binding
arbitration situation. If they want to get into the graduated
percentage issue, it would become a much more in-depth issue. He
advised if this were done, that legislators be higher than a range
10, but that is a policy call.
CHAIRMAN KOTT asked if there were questions for the prime sponsor.
Number 151
REPRESENTATIVE KIM ELTON asked if the department was still putting
together figures on the graduated percents.
REPRESENTATIVE HANLEY answered they were trying to get numbers
based on different categories, at least for the noncovered
employees.
Number 160
REPRESENTATIVE NORMAN ROKEBERG asked Representative Hanley to
comment on the university employees and others that are not covered
by collective bargaining, but who have historically made a good
faith effort to reduce their salaries and benefits. He said there
is a question of equity if they implement an across-the-board cut
when these employees have already "bitten some of the bullet."
Number 176
REPRESENTATIVE HANLEY stated that every bargaining unit will say
they have made good faith efforts to reduce. Others will say "that
union, or that bargaining unit or that noncovered person has better
benefits than I do." He said that the simplicity of the 5 percent
reduction is if there is inequity, this maintains it.
Number 197
REPRESENTATIVE BRIAN PORTER commented he had spent a considerable
amount of time in one of the positions being discussed. He also
stated he was part of a department which tried to responsibly
involve cost reduction. He would like to see those people who
tried hard at cost reduction be given some assistance. He said
they could possibly evaluate the average increases of contracts
over the last appropriate number of years, then appropriate the
overall percentages based on the reverse of that. He asked whether
we would not reach the same number, but yet credit past good work?
Number 214
REPRESENTATIVE HANLEY responded that you could try. However, some
have held the line on health care benefits, and some have not.
REPRESENTATIVE PORTER interjected he was speaking of the value of
the overall package.
REPRESENTATIVE HANLEY said it gets into the legislature deciding
they want everyone on an equal basis. He feels that is a laudable
goal, but to actually derive this goal is next to impossible.
Number 240
REPRESENTATIVE PORTER responded it wouldn't have to be a one-to-
one relationship, but they should receive some credit.
Number 252
REPRESENTATIVE HANLEY commented anything was possible. However,
would they do it over three, five or seven years? Bargaining units
change and people move into different scenarios.
REPRESENTATIVE PORTER said it was his understanding that numbers
are kept on the average contract increase and those numbers are
readily available for comparison. The numbers are there to work
with to account for the good work of managers in reducing their
costs.
REPRESENTATIVE HANLEY asked if Representative Porter was talking of
looking at individual bargaining units.
REPRESENTATIVE PORTER said right now, the noncovered employees
are 6.7 percent behind, on average, the covered employees.
REPRESENTATIVE PORTER said he was talking about percentage
differences over a time period in the increases from their
individual basis.
Number 265
REPRESENTATIVE HANLEY responded that if you don't take, for example
the noncovered employees, which at current level, if you look at it
over time, will be the same because if you average it out they will
be behind. The legislature has not granted an increase when
covered employees have had negotiated increases.
Number 267
REPRESENTATIVE PORTER gave an example of three unions and non-reps.
In the last ten years `union A' had an increase of 15 percent
overall cost to their contract, `union B' had 18 percent, `union C'
had 12 percent, and non-reps had 10 percent. He explained the
amount they should request in deductions should be reflected in how
much they have increased over the last ten years, assuming that
isn't too difficult to assess.
Number 287
REPRESENTATIVE HANLEY asked how they should assess the increase.
He asked whether they should take the total (indisc. coughing), and
divide it by the number of people. Sometimes certain people
receive different raises within the same bargaining unit because
they have tried to bring their own people at the bottom up.
Therefore, you get not only into bargaining unit, but by category
and range.
Number 286
REPRESENTATIVE PORTER said they are talking about overall goals for
overall costs of contracts. He thought it wouldn't be difficult to
come up with the same result of an overall 5 percent increase and
then vary it based on the last ten years.
Number 297
REPRESENTATIVE HANLEY stated that this would basically equalize
everyone's pay.
REPRESENTATIVE PORTER commented that he was trying to give some
benefit to past experience. That would not result in a
equalization of pay.
REPRESENTATIVE HANLEY commented that it would decrease the margin;
it may not equalize it, but it's leaning in that direction.
REPRESENTATIVE PORTER said it would tend toward compressing the
spread.
Number 312
REPRESENTATIVE ROKEBERG said they were talking about two different
elements; those being the impact on the lower ranges and the
disparity between different units and groups of employees.
Number 333
REPRESENTATIVE PORTER said that if you took a higher percentage
from bargaining units that have had higher increases over the last
ten years, you would be having that effect. It would be easier to
manage.
Number 312
REPRESENTATIVE ROKEBERG stated that he did not see that. He felt
that there needed to be two different calculations to achieve the
effects talked about. He asked Representative Hanley to comment on
this.
REPRESENTATIVE HANLEY said he didn't have the information there.
He said in trying to simplify the bill, it has become more
complicated.
Number 333
REPRESENTATIVE PORTER stated there was no doubt in his mind they
couldn't do this in this committee at this time. However, he is
not suggesting they delay the bill for that purpose, but that is
food for thought for the Finance Committee.
Number 335
REPRESENTATIVE ELTON responded that he would prefer having
something more comfortable before they move it on. He asked
Representative Hanley if there was any consideration to 5 percent
across-the-board and a 1.4 percent for those who didn't participate
in the previous pay raise.
REPRESENTATIVE HANLEY stated that it is worked into the bill. The
salary schedule is reduced for noncovered employees, whereas the 5
percent reduction applies to total compensation packages.
REPRESENTATIVE ELTON asked him to explain this.
REPRESENTATIVE HANLEY explained that the 5 percent cut for
noncovered employees is only for the salary schedule; it does not
include benefits. He said the bargaining unit is about 95 percent
of the average of the total package.
Number 359
REPRESENTATIVE ELTON said he understands the salary schedule was in
Section 9. Section 10 has a series of subparagraphs addressing
each of the items Representative Hanley was talking about,
However, his understanding of Section 11 is that it was for the
others.
Number 368
CHAIRMAN KOTT interjected about Section 10 (e) of the original bill
where it talks about "the average per employee compensation set in
the new contract may not exceed 95 percent of the average." He
said Representative Hanley is suggesting for the next bargaining
agreement there will be 5 percent in both wages and compensation,
or one or the other.
REPRESENTATIVE ELTON asked if those same cuts would apply to the
noncovered or exempt and partially exempt employees.
REPRESENTATIVE KOTT replied that the noncovered employees would
receive a straight 5 percent salary cut across-the-board.
REPRESENTATIVE HANLEY added after they have already had a 3.6
percent diminishment in their salaries simply because the
legislature did not increase the noncovered employees the last time
around. Under the provisions of HB 236 they would take another 5
percent.
REPRESENTATIVE HANLEY gave an example of two employees, one is
noncovered, one is covered. The noncovered employee makes $50,000
a year salary and the covered employee makes $50,000 a year salary.
Their benefits both equal $20,000 each. The noncovered employee
has 5 percent of the $50,000 reduction. The covered employee has
a reduction of 5 percent of $70,000 because it is compensation pay
which includes benefits.
Number 399
REPRESENTATIVE ELTON pointed out he was talking about history, not
what is happening in the future. The history is that the
noncovered employees did not participate in the last raise. The
net effect is they are taking a bigger hit with this legislation.
Number 410
REPRESENTATIVE HANLEY stated 5 percent of the total package is a
bigger reduction than 5 percent of a smaller amount. If you wanted
to do the same thing, you could say noncovered employees would get
a 5 percent salary reduction and covered employees would get a 5
percent salary reduction. The bargaining units would then choose
how they would achieve that.
Number 428
REPRESENTATIVE PORTER noted that would come close to a 3.5 percent
difference.
Number 430
REPRESENTATIVE ELTON commented the older he gets the more important
his benefit package is. He is not comfortable with what they are
proposing, which for many employees, is in the neighborhood of 7
percent.
Number 435
REPRESENTATIVE ROKEBERG asked if the legislators were part of the
salary schedule in Section 9.
REPRESENTATIVE HANLEY replied they are paid at a range 10 with no
step increases.
CHAIRMAN KOTT asked if there were additional questions for
Representative Hanley. Hearing none, he asked Wendy Redmon to join
them at the table.
WENDY REDMON, VICE PRESIDENT FOR UNIVERSITY RELATIONS, UNIVERSITY
OF ALASKA, STATEWIDE, asked if this was being teleconferenced.
CHAIRMAN KOTT stated that it was not.
MS. REDMON replied she had declined to testify on March 17 because
it was on teleconference. She said this was probably the most
uncomfortable testimony she has had to give. She was asking that
the university be exempted from the bill, because the salary
schedule the university recently adopted is lower than what is
currently in HB 236. The university is already paying less in
three out of the four key categories--accounting, tax accountants,
administrative assistants and secretaries--than what the state is
currently proposing at a 5 percent reduced level. She said the
Board of Regents has taken a very hard-line position on salaries
over the past decade. The increase for average employees over the
last ten years has been 22.8 percent. The state has gone up 55.4
percent during that same period of time.
MS. REDMON stated when the state experienced the health care
benefit crisis, the university redid their whole package. The
state is paying $428 per month per employee. The university is
paying $328 per month. She said the university employees are on a
co-pay system; they are paying cash for part of their health care
insurance as well as having their overall level of insurance
reduced. Ms. Redmon related they did away with the Fairbanks
differential three years ago. She doesn't mean to be blasting the
state. Their current pay scales are not out of line, but for the
legislature to say to the university and the Board of Regents, who
have taken a very conservative approach to salaries, that they are
arbitrarily going to cut back 5 percent? She said what
Representative Hanley said was correct in that they wouldn't be
changing the differential, they'd just be perpetuating it. Besides
the university employees, the other largest market in the state are
other state employees. Ms. Redmon said this a very inequitable
situation. They are trying to do things internally, and hope the
university is a good place to work and can make up for it in other
ways. She is requesting there be some acknowledgment that the
Board of Regents, in their management of the university, in their
fiduciary responsibility, has kept its services in line with
resources that are available.
MS. REDMON also stated that the university has two small unions.
The first is a faculty unit with approximately 250 employees. Those
salaries and benefits are exactly the same as nonunionized faculty.
She said physical plant and maintenance workers make up the other
unit. They negotiated a 1.5 percent salary increase over the next
two years, which is a very modest increase in light of where they
started relative to their peers in the state.
MS. REDMON acknowledges the dilemma the legislature is in.
However, there does need to be some consideration in looking at
those elements of the state that have taken the initiative to try
to deal with this issue and not just throw them in with an across-
the-board reduction.
Number 512
CHAIRMAN KOTT commented this was what Representative Porter alluded
to earlier. There have been a number of conscientious and frugal
efforts in the negotiation process, and possibly those bargaining
units should be given some credit.
REPRESENTATIVE PORTER asked if, in the first category, they took a
higher percentage reduction in existing wage than 5 percent, or
whether she was comparing.
MS. REDMON interjected that she was comparing. Currently, for
example, the administrative assistant position at the university
has a pay scale (which they just put into place) at $14.62 an hour.
The pay scale under HB 236 for the beginning wage for this position
is $16.25 an hour, $2.00 more than what the university is currently
paying.
REPRESENTATIVE PORTER asked if their classifications mirrored the
state classifications.
MS. REDMON responded their classifications are not set in statute.
This legislation would direct the Board of Regents to adopt a
compensation reduction in accordance with the state. There is no
perfect correlation. She stated there are many positions at the
university the state does not have. For the ones that are similar
they would look at, for example, the administrative assistant mid-
level position and find their salaries are $14.62. State salaries
are set at $16.25. She doesn't think it is the state's intent to
give them the extra money so the scale levels are comparable.
REPRESENTATIVE PORTER asked if these positions were the same job
descriptions.
MS. REDMON replied essentially, yes. She said with the faculty, of
course, there are no comparisons. HB 236 doesn't anticipate how to
deal with that. Average salaries for faculty are $45,700 per year.
The average for K-12 teachers is $46,000. Ms. Redmon stated that
for West Coast universities the averages are $47,000 per year.
Without including the area differential in faculty salaries, it has
presented enormous problems in trying to recruit faculty to come to
Alaska. She realizes many of their constituents would not feel
sorry for them, making a $46,000 year, a nine-month salary.
However, that is the national market they are competing in to get
faculty. If they cannot be competitive in their salaries, they
simply cannot find people to come here with the other downsides to
many disciplines working in the state.
Number 533
REPRESENTATIVE ELTON asked if the annual salary included teaching
assistants.
MS. REDMON responded it was only full-time, nine-month faculty.
She said there are people that have been working at the university
for 30 years and are making $90,000 a year, but most of the faculty
are at the low end of the scale.
Number 562
REPRESENTATIVE ELTON asked if those would be assistant, associate,
and full professors.
MS. REDMON said that would be correct, with Ph.Ds.
Number 562
REPRESENTATIVE KUBINA commented on the Vice Chancellor at the
University of Fairbanks making $124,000 a year. Maybe they could
take it out of those people's salaries. He asked, as the bill is
written, whether they would have to reduce everyone's salary 5
percent, period.
Number 568
MS. REDMON explained it would direct the university to develop a
compensation reduction in accordance with Section 9. Section 9
says essentially, salaries will be reduced by 5 percent. She
supposed they could argue they would do nothing, because in effect,
their salary schedules are already, and in many cases, lower than
what is set out in Section 9. Therefore, they would just ignore
this; however, she would feel better if they were either clearly
exempted and there was some confidence the Board of Regents was
going to continue to do what they've been doing in terms of
managing its fiduciary responsibilities. So it is a little
unclear.
MS. REDMON continued that it was very clear, with the collective
bargaining side, they are under the Public Employment Relations Act
(PERA). The elements under Section 10 would clearly apply to those
collective bargaining groups they are currently under negotiations
with.
Number 583
REPRESENTATIVE KUBINA observed from being on the campaign trail, it
is not the $46,000 salaries, but rather, it is the $124,000
salaries that make it hard for the public to have sympathy.
CHAIRMAN KOTT commented that on the same campaign trail they heard
about the state employee at the assistant deputy commissioner
position making $80,000, not the clerk making $12,000 per year.
Number 589
REPRESENTATIVE ROKEBERG asked Ms. Redmon if they had an analysis to
prove their point or demonstrate that more graphically.
MS. REDMON stated she had her people pull out four of the most
common classified positions and they took a look at what the
university pay rate is, what the state range is, what their current
hourly rate is, and what the proposed hourly rate is under HB 236.
She said she was quite moved by the testimony of state employees
eligible for public assistance. It never occurred to her so many
people employed at the university, earning less than $11.00 hour,
with a family of four, would be eligible for assistance.
Number 604
MIKE McMULLEN, ACTING DIRECTOR OF DIVISION OF PERSONNEL, DEPARTMENT
OF ADMINISTRATION, stated he was there to answer any questions.
Number 609
CHAIRMAN KOTT asked if he could discuss the various categories of
employees, levels one, two and three.
MR. McMULLEN said the collective bargaining statute (PERA) provides
three classes of employees. Class One is not allowed to strike.
If earlier processes of bargaining have failed, there is mandatory
arbitration to set the contract terms for that group, which
consists of police, fire and corrections. Class Two employees are
those whose services can be interrupted without affecting public
safety or welfare. Those include snow removal and education.
Those employees are treated like Class Three until the employer is
able to convince a court that public safety is being jeopardized.
At that point, they are treated like Class One employees. The
biggest class is Class Three employees, who have the unlimited
right to strike when they reach impasse in the collective
bargaining process. It is that group, where the employees have the
economic mechanism of striking, where the employer has the economic
mechanism of imposing contract terms.
CHAIRMAN KOTT asked if resources were available to go back over the
past ten years and look at the various bargaining contracts, to see
what kind of increases there have been. He asked if that
information was available within the department.
MR. McMULLEN said the information was available. He said that it
makes a threshold question of at what point in time were relations
between the units equitable, to be a baseline just picking a point
in time.
TAPE 95-21, SIDE B
Number 000
CHAIRMAN KOTT asked if the unions had negotiated a contract since
1992.
MR. McMULLEN commented the Class One employees have not had a new
contract since 1990. The rest have.
CHAIRMAN KOTT asked if the noncovered employees' last increase was
in 1991.
MR. McMULLEN said that was correct.
CHAIRMAN KOTT noted Representative Elton's concerns were that the
noncovered employees had not had a cost of living increase since
1992.
MR. McMULLEN said it was a 3.6 percent increase in 1992.
CHAIRMAN KOTT asked if Mr. McMullen had the numbers for 1993, 1994.
MR. McMULLEN said nonrepresented employees, and general government
employees have not had an increase. Supervisors have an increase
scheduled under the terms transmitted to this legislature, as well
as do laborers and crafts. Confidential has a 2.5 percent increase
scheduled for July 1, transmitted to the last legislature. The
Inland Boatman's Union has a 3.5 percent increase scheduled for
July 1. The Mt. Edgecumbe teachers have an increase coming up
which was transmitted to the last legislature.
CHAIRMAN KOTT asked when the last cost of living increase for
noncovered employees was.
MR. McMULLEN answered 1991.
CHAIRMAN KOTT noted that the noncovered employees had lost...
MR. McMULLEN interjected, 3.6 percent to the rest of the state.
CHAIRMAN KOTT asked if this was per year or over the past three
years.
MR. McMULLEN responded over the last three years.
Number 074
REPRESENTATIVE ROKEBERG commented it would be helpful to have a
spreadsheet analysis of the historic perspective of the items they
have been discussing.
Number 081
MR. McMULLEN responded they had recently prepared a document of
that nature for the Senate Finance Committee.
Number 088
REPRESENTATIVE ELTON commented they were significantly changing the
philosophy of collective bargaining. He asked Mr. McMullen if he
considered himself still a collective bargainer if you were
operating under the terms of this epic of legislation? He said
there is not a lot to bargain other than implementing the mandate
from the legislature.
Number 100
MR. McMULLEN responded that doing this does not destroy collective
bargaining per se. The collective bargaining statute clearly sets
out the legislature's role in agreements. It is specific from the
statute that the legislature has a role in providing oversight to
the process. He said within the realm of collective bargaining,
the legislature would give some guidance. In regards to specific
bargaining for the three-year life contemplated by HB 236, this
would take away the flexibility for trading anything for or against
salary increases.
Number 139
REPRESENTATIVE ELTON pointed out he does not remember a time the
oversight has been applied pre-bargaining instead of post-
bargaining when legislative oversight has been provided.
MR. McMULLEN responded there had been no specific legislation
pre-negotiation. However, there had been clear directions. For
example, the question of retroactivity, the feedback from the
Finance Committee about no longer having retroactive agreements, to
the point they do not have retroactive agreements coming before the
legislature.
REPRESENTATIVE ELTON asked if those directions were in the form of
law.
MR. McMULLEN replied they were not.
REPRESENTATIVE KUBINA queried whether the legislature had ever
passed a law directing them to do something regarding collective
bargaining.
Number 158
MR. McMULLEN stated they had passed laws regarding out-of-state
differential under PERA.
Number 171
REPRESENTATIVE KUBINA asked if the legislature could pass a
resolution rejecting the contracts already submitted. Or, can the
legislature just not fund them?
Number 197
MR. McMULLEN responded that, with respect to the three there now,
the legislature could clearly reject by resolution. Even without
the resolution, they could be turned down in the appropriations
bill, which has happened before. He said the contracts from prior
years are past the resolution point. However, funding can be
turned down. There has been a front section in some appropriation
bills in the past that says, none of the appropriations made by
this bill can be used to fund the increase in such a contract for
the coming fiscal year. He said there are multiple mechanisms
available to the legislature in rejecting terms of contracts.
REPRESENTATIVE KUBINA asked if the rest of the contract would still
be in effect.
MR. McMULLEN explained if the contract is rejected in any form, the
parties go back to negotiation. The resolution is nonbinding in
that, if the appropriation itself doesn't come through at the end,
that resolution doesn't mean the rest of the terms go forward.
REPRESENTATIVE KUBINA asked if the Administration supports HB 236.
MR. McMULLEN replied, it does not.
REPRESENTATIVE KUBINA asked if the Administration has taken an
official position against the bill.
MR. McMULLEN responded he was out of town on the 17th and did not
know what the deputy commissioner testified.
Number 218
CHAIRMAN KOTT asked if the state could unilaterally rescind an
existing contract, simply by not funding it. Wouldn't the state
still be liable?
MR. McMULLEN explained the legislature could reject the terms by
specifically not funding those changes the contracts provide. This
is a major issue with retroactive agreements. If the parties have
an agreement, they start filling that agreement in January, and
then in May the legislature says they don't get the salary part of
the agreement. These parties have already been living with the
agreement in other areas, but it was all part of the same package.
Mr. McMullen stated if part of the package is thrown out, then the
whole package is thrown out. The legislature can kill any
provision by specifically not funding (indisc. -- coughing). Then,
the parties are left to renegotiate.
Number 261
REPRESENTATIVE KUBINA thought there was a court decision that said
once the contract has been ratified by the legislature the first
year, they were obligated to the full three years.
MR. McMULLEN noted it was the opposite conclusion. The legislature
has the renewed opportunity each year to address those terms.
REPRESENTATIVE KUBINA asked what the use of a contract was.
Number 269
REPRESENTATIVE PORTER commented that, like so many things, the term
of the contract is subject to appropriation. This is the power the
legislature has.
REPRESENTATIVE ELTON observed that if that was the case, they
didn't need the bill.
MR. McMULLEN stated the legislature could reject the contracts by
not appropriating them. However, he didn't think they could roll
back to anything except what had existed before the contract was
before them.
Number 274
REPRESENTATIVE ELTON stated there was nothing in HB 236 prohibiting
a 5 percent pay cut and a four-day work week. For example, under
the terms of the contract, you could have a four- day work week of
eight hours a day, for 32 hours. That would reduce the package by
5 percent.
Number 295
REPRESENTATIVE PORTER thought the bill provided the wage scale
would be reduced for the nonrepresented employees.
CHAIRMAN KOTT asked if there were any further questions for Mr.
McMullen and made the point the Administration was against HB 236.
MR. McMULLEN replied yes.
CHAIRMAN KOTT asked Ms. Ellerbee from the Department of Health &
Social Services to talk about the threshold of state employees on
public assistance and the number of potentially eligible employees.
Number 314
MYRTLE ELLERBEE, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF
HEALTH & SOCIAL SERVICES (HESS), said she would explain the chart
provided to the committee along with the basic eligibility criteria
for Aid to Families with Dependent Children (AFDC). She stated in
regards to how earned income is used and how they apply the
disregards, they use gross earned income. They allow the family to
have an earned income disregard of $90 from the gross. Ms.
Ellerbee said households are allowed a $30 deduction which runs for
12 months, and an additional one-third of the remainder for the
first four months. This means the first four months on AFDC, if
the net income is $891 for a family of two or less, they apply the
ratable reduction. Therefore, if a family's earned income, with
all the disregards, equals $891, they would pay them $821 per
month. Ms. Ellerbee stated there is also an allowance for up to
$200 for child care deductions. They use the net earned income,
subtracted from the needs standard.
Number 345
REPRESENTATIVE KUBINA asked if there were state employees receiving
aid for dependent children.
MS. ELLERBEE said she didn't have that information, but would
research the matter.
REPRESENTATIVE KUBINA stated he would like to know that information
and if we cut salaries 5 percent, how much more will they have to
pay in aid to dependent children.
REPRESENTATIVE PORTER asked with regard to that, if she would
separate how much is state money and how much federal.
MS. ELLERBEE replied that it was always 50/50.
REPRESENTATIVE KUBINA said they are referring to the full-time
employees.
Number 358
CHAIRMAN KOTT noted the federal poverty level for a family of four
was $1,579.
MS. ELLERBEE stated the need standard for a family of four was
$1,113.
REPRESENTATIVE KUBINA asked Ms. Ellerbee to explain what the need
standard was.
MS. ELLERBEE replied the federal government mandated they set the
need standard. The legislature has set the need standard at
$1,113, which is the minimum to live on. That is illustrated on
the AFDC Needs and Payment Standard Chart.
Number 380
REPRESENTATIVE PORTER asked her to define the application of the
rate of the reduction.
MS. ELLERBEE stated in 1993, the legislature said they were going
to reduce the payment by a percentage of the need. That started
out at 2.84 percent. She said it is now 7.85 percent of need.
They previously paid 100 percent of need, until October 1993, and
now they will pay only a portion. That is why there is a
difference between the need and the maximum payment. Ms. Ellerbee
related the maximum payment will not change until the legislature
changes it. The percentage of need will constantly change as
social security doesn't increase every January.
CHAIRMAN KOTT noted this was gross.
MS. ELLERBEE agreed this was gross, prior to taxes and any other
deductions.
Number 407
REPRESENTATIVE SANDERS asked if they pay federal income taxes on
this money.
MS. ELLERBEE replied no. They take their gross income and give
them the $90 earned income disregard, which is supposed to include
the amount they pay for federal tax.
Number 408
REPRESENTATIVE SANDERS asked if she had said taxes and other
reductions.
MS. ELLERBEE replied that employers often take deductions to cover
other benefits out of paychecks. For example, part of their health
care, but it does not come out of this money.
REPRESENTATIVE ROKEBERG asked if they make more money would they
have to give it back to the state.
MS. ELLERBEE said if the state has overpaid them, they would have
to pay it back. If they are working and make too much money and
they declared it on their monthly report, the state would close the
case. She stated in some cases, depending on how long they have
been on assistance, they are entitled to extended benefits, as in
Medicaid and child care assistance.
Number 420
REPRESENTATIVE SANDERS asked if people on assistance have health
benefits for hospital stays.
MS. ELLERBEE answered they would have Medicaid because it is
related to this particular program. If they have insurance from
their employer, that insurance would cover them first, then
Medicaid would pick up the balance.
REPRESENTATIVE SANDERS commented he wasn't thinking of working
state employees. He's thinking of them not working. He said when
you add all of the programs up, the people on assistance would be
making more than some of the people who have testified on the
teleconference line. He asked how many people are working for the
state who could be on welfare if they lost 5 percent from their
pay.
MS. ELLERBEE said she didn't have the number of employees and what
their salaries are.
Number 438
CHAIRMAN KOTT asked what the minimum amount that a family of four
must gross to be above Alaskan poverty standards.
MS. ELLERBEE didn't have the exact figures with her.
CHAIRMAN KOTT commented they could have quite a number of people
below poverty standards who are presently working, who might opt
for assistance if they get hit with a 5 percent cut. He asked the
department to supply the committee with a breakdown of the number
of employees in the different ranges.
REPRESENTATIVE KUBINA pointed out that page 3 of the bill shows the
monthly salaries. The lowest range is $1,425 per month.
Number 463
REPRESENTATIVE PORTER referred to the previously mentioned
comparison of what would result from this legislation passing, as
relating to the benefits provided to current welfare recipients,
and the assumption that the benefits that are provided to current
welfare recipients are going to stay static. He said he would
submit that's probably not the case.
Number 469
REPRESENTATIVE ROKEBERG stated there were too many variables to
take the chart. They are dealing with elusive numbers and could be
drawing some incorrect conclusions.
REPRESENTATIVE SANDERS commented that in two days of testimony, he
had come up with many more questions than answers. He hesitates
sending the bill out without knowing more.
CHAIRMAN KOTT stated HB 236 would go to a subcommittee, which
Representative Sanders would chair.
Number 485
REPRESENTATIVE ELTON concurred with Representative Sanders. He
said at some point, they essentially would be encouraging people at
the lower end of the pay scale to get off that pay scale and on to
public assistance.
Number 497
REPRESENTATIVE ROKEBERG commented if the Alaska poverty level is
$15,000 for a family of four, is that what their target is?
Number 504
REPRESENTATIVE ELTON said an easier way to look at it, perhaps, is
not focusing on people coming off the state payroll and onto public
assistance but, rather the disincentive for people to go off public
assistance and into an entry level state job.
CHAIRMAN KOTT asked if it was worth going to work 40 hours a week
for $200.
REPRESENTATIVE ROKEBERG said they should give the Department of
Administration some prototype comparisons so they could figure the
variables. For example, a single mother with one child; also, a
family of four.
Number 519
REPRESENTATIVE PORTER said he had no doubt the lowest paid full-
time, state salaried employee makes more than 50 percent of many of
the employees in small businesses, considering the total package of
the state. To say we have to have the lowest paid full-time
salaried employees be able to sustain a family of seven is
ridiculous. This bill is part of the package that is looking at
reducing every section of state spending. He also said some of the
items they are comparing against it, in terms of welfare, are not
going to be there either.
Number 537
REPRESENTATIVE ROKEBERG agreed they should have entry level jobs to
provide more employment for everyone, but they are not going to pay
the freight for raising the payments they have.
Number 560
CHAIRMAN KOTT asked if there were more people wishing to testify on
HB 236. Hearing none, he said it was the committee's intent to
hold the bill over to be heard in a subcommittee chaired by
Representative Sanders along with Representatives Masek and Kubina,
which will look at the possibility of a graduated scale.
Number 574
CHAIRMAN KOTT stated they did have an amendment yet to be adopted.
Number 577
REPRESENTATIVE PORTER made a motion to adopt amendment one K-1,
dated March 8, 1995.
CHAIRMAN KOTT restated the motion to adopt amendment one, K-1 dated
March 8, 1995, by Kramer. He asked if there was any objection.
Number 581
REPRESENTATIVE ELTON was uncomfortable in increasing the disparity
they have, for example, with the new CEO of Alaska Housing Finance
Corporation (AHFC) and the Governor. He has a philosophical
objection with increasing the disparity with the Governor and a
captain of the ferry system. We are requiring the commissioner of
Natural Resources to run an oil company, and we are not paying them
much to do this. He feels they are compounding a problem they
already have. Representative Elton said if people think they are
correcting unfairness in the salary code by reducing the Governor's
salary by $4,000 a year, we're not getting to the heart of any of
the state's spending or revenue problems.
CHAIRMAN KOTT appreciated his comments and added if the amendment
was adopted they could deal with the inequities on an equitable
basis.
Number 604
REPRESENTATIVE PORTER believes they both ran on reduced spending
and would probably want be part of it.
Number 608
REPRESENTATIVE ROKEBERG associated himself with the comments of
Representative Porter.
CHAIRMAN KOTT asked for a roll call. Representatives Porter,
Masek, Rokeberg and Sanders voted in favor of the amendment.
Representatives Elton, Kubina and Kott voted against the amendment.
The amendment was adopted. Chairman Kott restated the bill would
be held in committee until further considerations could be made.
Number 626
REPRESENTATIVE PORTER said they should try to keep in mind the
number the Finance Committee had in mind and target that number
with whatever scenario they came up with.
CHAIRMAN KOTT stated he preferred they iron out the details before
sending it on.
ADJOURNMENT
There being no further business to come before the House Labor and
Commerce Standing Committee, Chairman Kott adjourned the meeting at
4:43 p.m.